Show THE VOICE OF BUSINESS The chickens come home to roost By Richard L L. L Lesher Pres Chamber of Commerce of the United States Ask the folks In Dalton Georgia If H there is really a shortage of natural gas On Friday January 14 they received 12 hours notice that their supply would be cut back backby backby backby by 52 percent It was Dalton suffered an immediate loss of jobs Other communities all over the nation are experiencing similar curtailments although few few so so far-are far as drastic as Daltons WHAT HAPPENED First this winter has been unusually severe over most of the country The prolonged cold weather has increased the need for fuel of all kinds It has also frozen many navigable waterways which prevents barge deliveries of petroleum products and coal Industries deprived of these fuels must either shut down or switch to natural gas if they have the equipment So the demand for natural gas has suddenly ballooned Second this sudden increase in demand is meeting dwindling supplies of gas Gas production peaked in this country in 1972 We are now using more every year than is being added to the reserves Our present reserves are good for only eight or nine years at most This situation should not come as a surprise The National Chamber the gas producers and other business groups have been warning that it would happen for 22 years That's right 22 years ever since the Supreme Court decided in the Phillips Petroleum case that the Federal Power Commission is required to regulate the wellhead price of natural gas sold in n Interstate commerce TilE THE INEVITABLE result of federal regulation has been to hold the price of gas well below the level necessary to attract producers to discover and develop new new supplies It has also encouraged a waste of a fuel that should be reserved for premium uses Why cant can't the permit a realistically high price Because every time it tries it gets sued by so-called so consumer representatives who demand that the price be cost based And what's wrong with that Cost based to a regulatory agency means last years year's costs casts not this years year's costs or next years year's costs In an inflationary economy the difference can be ruinous Cost based also means average costs But the energy company exploring on onAlaska's onAlaska's onAlaska's Alaska's North Slope or offshore offshore off off- shore in feet of water is not experiencing average costs An idea of just how far from reality the official prices are can be gained by a comparison of free market free market intrastate rates and federal interstate rates Gas is selling in the producer states for per thousand cubic feet That's what its it's really worth In contrast the federal ceiling for newly discovered gas Is per thousand and much interstate gas is still moving under contracts contracts contracts con con- tracts reflecting earlier ceilings around 40 cents THE Tilt ONLY way out of tl this s problem is total deregulation of gas prices Temporary waivers of the rules can paper over the cracks for another winter or two but that would only postpone postpone post post- pone the inevitable However since deregulation is politically unpopular I am not too optimistic optimistic optimistic op op- op- op about the prospects It makes a dandy issue for the demagogues Would deregulation cause hardships for present users of natural gas Well it would certainly cause a price increase at the consumer level although not as great as you might think most of the cost of gas service goes to pay for the distribution system not for the gas itself And whatever price increases occurred would undoubtedly by phased in gradually to allow people time to adjust Nobody ever likes higher prices But let me pose two extremely relevant questions which deserve consideration on both the individual and the national levels 1 large By consumers who use coal electricity or fuel oil for heat are now paying the market free-market price Why do those who use natural gas deserve a special subsidy not available to others 2 Would you rather have gas at per thousand cubic feet or not have gas at per thousand cubic feet |